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Monday Morning Cup of Coffee: Mel Watt promises to suspend GSE fee hikes

December 23, 2013
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Monday Morning Cup of Coffee takes a look at news crossing HousingWire's weekend desk, with more coverage to come on larger issues.

The mortgage finance system can forget about the sudden risk of rising fees at Fannie Mae and Freddie Mac ... at least for now. A postponement to the  announced plan is in the works, according to news outlets.

Incoming Federal Housing Finance Agency Director Rep. Mel Watt, D-N.C., said Friday that he will postpone a previously announced increase in fees at Fannie Mae and Freddie Mac, the Wall Street Journal reported.


According to the Wall Street Journal, Watt -- who will be sworn in on Jan. 6 -- confirmed he will delay mortgage fee increases until he has time to fully evaluate the reasoning behind the plan.

The WSJ articles notes the following:

"Earlier this week, Fannie and Freddie unveiled additional specifics about those increases, which would sharply raise certain fees charged to borrowers who don't have perfect credit scores or substantial down payments. Fannie and Freddie issued the directives at the instruction of the FHFA."

Analysts with Compass Point Research & Trading responded to the announcement, saying none of the details were officially confirmed. However, "we believe this delay will include both the 10 basis points g-fee increase as well as the LLPA increases announced on December 9," the research group said.

Foreclosure auction sales are "skyrocketing" across the nation as lenders benefit from a pool of investors who want to convert more homes into "Buy to Rent" single-family homes.

Forbes reported on this phenomenon, noting the share of residential properties offloaded at foreclosure auctions recently increased 63% from year ago levels.

So when it comes to agency mortgage-backed securities, how is the market reacting after the Fed announced plans to taper its monthly purchases of both Treasurys and MBS? Pretty well, according to Chris Flanagan and Justin Borst, who report for the BofA Merrill Lynch Securitized Products weekly update.

The analysts maintain a neutral weighting for agency MBS, although they expect "net tightening of 5 to 7 basis points" in the near future. Their latest report claims the preferred coupon is the Fannie 4 right now.

As for the non-agency market, the securitized report says, "The start of tapering and more clarity surrounding the Fed exit should be positive for the non-agency market."

The Federal Deposit Insurance Corp. did not report any bank closures for the week ending Dec. 20.

 

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